Free Research Paper About The Concept Of Free Markets
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A free market in simple terms is one that has no interferences from any forces other than the interplay between demand and supply. Hence, the price of the commodity or service in the market is ideally determined by the two forces of demand and supply only. Zupan explains that any market that is influenced by forces other than demand and supply is not free. Hence, interferences from the law by the government in form of sanctions, taxes, subsidies or any other form of interference that in the end has an effect on the final price of the commodity (171). The virtues of a free market are entrenched in the principle of Laissez-faire that advocates for free competition that is not influenced by external forces. Thus, market forces of demand and supply are regarded as the ideal balance of a fair competitive market. However, such principles as Laissez-Faire have in modern times been abused by governments and non-governmental institutes which have manipulated the principles to achieve a means to their objectives.
Free markets provide assurances for person’s property rights despite the fact that free markets lift barriers to trade making sure that all parties are given a fair chance at conducting business. In real life situations, however, there is an observable contrast in the manner in which world super powers such as the United States advocate for a free world market while manipulating market conditions to favor its economy. Critics of Laissez-Fair principles note that in real world experiences free markets are open to vulnerabilities that result in the contrast of what a free market should be meant to achieve in the first place. To be precise, free markets often allow unscrupulous business persons the freedom to manipulate the system and venture into the development of monopolies or oligopolies that in turn can set the price in the market. In that regard, there is a need for the intervention of the government and the law to restore order in the interest of the public.
In an unregulated free market climate it is often the case that mergers and acquisition of the industries’ essential services and goods may result in the privatization of such basic amenities through giant corporations that form monopolies. The government, henceforth, has no choice but to intervene employing legislation that encourages competition in the industry in order to adjust the prices of essential goods and services to reasonable levels. Similarly, forces of demand and supply as well do not always result in fairness in terms of creating a balance that is depictive of a free market environment. Owing to speculations in respect to adjustments in the demand of goods and commodities in the market, unscrupulous business people may take advantage of increasing demand in the market to hoard goods or services in order to manipulate the price for their benefit.
Sandel observes that the free market economy in the United States has resulted in more harm than good since it has put everything up for sale. To that end, the social fabric of society has become corrupted by the greed for money occasioned by the influence of external forces who manipulate the forces of demand and supply to meet individualistic interests in profit making. In that regard, the levels of inequality in the United States are no longer measured by the what money can buy in terms of luxury. Rather, inequality as brought about by the influence of the corrupted free market has resulted in unfairness in access too civil rights. To that effect, manipulation of free market has developed inequality in the access of essential goods and services such as education, political influence, medical care, and access to justice.
Leaving the free market to forces of demand and supply is therefore but an illusion since in actual sense there cannot exist a market that purely is dependent on the forces of demand and supply to create an operational balance. Henry Farrell argue that for the sake of the common good, control measures have to be placed on a free market to regulate the actions of business people who are bent on manipulating the market for their benefit. Essentially, the role that the government plays in the implementation of policies that address pertinent economic concerns have an influence on the soundness or health of the economy. In other words, without decisive actions through legislation or otherwise on economic stimulus, the free market left in the hands of the forces of demand and supply can result in damaging results such as the economic recession that was experienced in the USA following 2007 global financial crisis.
According to Bergman the government plays a central role in the United States in licensing health facilities and professionals a form of regulation in the healthcare sector. Without the involvement of the government in this crucial service sector he adds, there would develop a crisis in which access to healthcare can be the preserve of the fortunate in the society who can be able to afford it. Hence, the role of the government in regulating the industry serves to ensure that the public have an equal opportunity to accessing essential healthcare facilities (66).
Similarly, other essential services such as education, transport, and security if left unregulated in the hands of private players can deny the majority of the American populous of various essential goods and services. To that effect, access to such essentials is left in favor of those with the will power in the form of largest payer lobbying or purchasing power. As a result, the less fortunate in the community are unfairly denied access to fundamental goods and services.
Free markets should not, however, be mistaken for free trade; the United States has been in the frontline to advocate for a free international market when in actuality it practices control mechanisms when it comes to international trading between the United States and other countries. Ahearne, Griever, and Warnock explain that the US is bias in its international trade policies in line with its specific interests. To that end, financial information becomes central in import and export trading for the US in international trade. Hence, listing information in the US securities exchange serves to advantage foreign businesses that conduct international trade with the United States. On the other hand, those that do not conform to the United States regulations find that their business portfolios are undervalued which makes the pricing of their goods and services in the US market lower and unprofitable. It is thus apparent that the concept of free market in exportation and importation of goods by the US is actually not free and is subject to regulations as stipulated by the US government (333).
Maintaining the financial might of the United States relies on control measures that are placed on the free international market in the form of policies, sanctions, and tariffs etcetera that serve to advantage trade for the United States. It is interesting to see how individualistic interests of the United States serve to undermine the advocacy for a free international market by the US. Double standards portrayed by the US are but an indication of the protectionist policies that are implemented in order to cushion the US economy from manipulation that occurs in a free market environment.
Free market thinking also has found its way into the sphere of environmentalism given that there has been in recent time the development of free market environmentalists. The free market environmentalist by definition is an individual who believes in the principles of a free market in the preservation and conservation of resources in the environment. To such activists conservation of environment is dependent on freedoms in tort law and property rights in that those affected by pollution have a right to seek compensation from the polluters.
On the contrary, however, the free market environmentalists note that the interference of the government in the form of legislation disadvantages the aggrieved in favor of companies that advance pollution of the environment. To that end, free market environmentalists advocate that government policies on pollution should empower the aggrieved to seek compensation from the polluter that ultimately will deter polluters from destroying the environment to from the onset. The challenge according to Partridge is that advocacy for rights to claim compensation do not address concerns or the main purpose of environmental conservation laws. For one, they do not address the collective regulation requirements that deter pollution of depletion of natural resources. The reason being that such doses not provide a means for holding polluters accountable to the environment since it only holds them accountable to the victims.
Furthermore, the approach provided by free-market environmentalists to address pollution concerns are merely reactive because they do not offer solutions to undetected pollution. In other words, if pollution is not reported to have affected someone no action can be taken to save the environment from its effects. Hence, free market environmentalist suggestions on policies to address pollution are not sufficient to address the pollution problem effectively. Moreover, privatization of natural resources cannot be realizable since it is difficult for any individual entity to claim ownership to a certain natural resource. On that note, the legal responsibility for the conservation of the natural resource or the environment for that matter cannot rest on private individuals. Hence, to protect the biodiversity of the environment it is necessary that the government steps in to legislate companies in regards to obligations to environmental conservancy.
The concept of free markets as developed in the essay advocates for a liberated market where purely forces of demand and supply strike a balance to determine the price of commodities in the market. The review finds that this is an ideal situation in which there is no interferences from external forces. However, such an ideal situation is mythical or fantastical since no market purely exists without external influence. People driven by greed or otherwise often influence market trends taking advantage of demand and supply to benefit themselves. To that effect, the United States government is obligated to protect the interests of its citizenry and to cushion the US economy form financial manipulation that is left vulnerable in a free market system. Otherwise, an unregulated or free market results in inequalities that amount to disadvantaging the poor in favor of the elite and the influential in the society. Essentially, the review is a detailed analysis of the concept of free market and its implications for the American economy as discussed.
Ahearne, Alan G, William L Griever and Francis E Warnock. "Information Costs and Home Bias: An Analysis of US Holdings of Foreign Equities." Journal of International Economies 62 (2004): 313-336. Web. 26 1 2015. <http://www.nuigalway.ie/staff/alan_ahearne/documents/information_costs.pdf>.
Bergman, David M. "The Role of Government and Lobbying in the Creation of a Health Profession: The Legal Foundations of Counselling." Journal of Counseling and Development 91.January (2013): 61-66. Web. 26 1 2015. <http://www.nbcc.org/Assets/JCD_Govt_and_Lobby_Article_(Publ)_1-13.pdf>.
Farrell, Henry. "The Free Market is an Impossble Utopia." The Washington Post 18 July 2014. Web. 26 1 2015. <http://www.washingtonpost.com/blogs/monkey-cage/wp/2014/07/18/the-free-market-is-an-impossible-utopia/>.
Henry, John F. "The Ideology of the Laissez Faire Program." Journal of Economic Issues XLII.1 (2008): 209-223. Web.
Lyon, Thomas P and John W Maxwell. "Corporate Social Responsibility and the Environment: A Theoretical Perspective." Review of Environmental Economics and Policy (2008): 1-22. Web. 26 1 2015. <http://www.erb.umich.edu/Research/Faculty-Research/lyon_maxwell_csr_theoperspective_jul_2008.pdf>.
Mamlyuk, Boris N. "Analysing the Polluter Pays Principle Through Law and Economics." Southeastern Environemental Law Journal (2010): 44-86. Web.
Partridge, Earnest. Environmental Ethics and Public Policy: With Liberty for Some. 2004. Web. 26 1 2015. <http://gadfly.igc.org/papers/liberty.htm>.
Sandel, Michael. "Why we Shouldn't Trust Markets with our Civic Life." TED Global June 2013. Web. 26 1 2015. <http://www.ted.com/talks/michael_sandel_why_we_shouldn_t_trust_markets_with_our_civic_life>.
West, Cornel. "Democracy Matters: What Ails America's Political and Social Systems?" The Globalist 24 January 2005. Web. 26 1 2015. <http://www.theglobalist.com/cornel-west-democracy-matters/>.
Zupan, Mark A. "The Virtues of Free Markets." Cato Journal 31.2 (2011): 171-198. Web.
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